Sales of Phones Up Again as Feature Phones Decline

Mobile phone sales gained 11 percent year-over-year for the second quarter of 2011, despite a decline in sales of feature phones, according to the latest report out from analyst firm IDC Thursday.

OEMs shipped some 365.4 million phones worldwide in the second quarter of 2011 as opposed to 328.4 for the same period last year, IDC's Worldwide Mobile Phone Tracker said.

Although that constitutes 11.3 percent growth over 2010's second quarter, however, it also included the first decline in feature phone sales in the past two years -- indications have been pointing in that direction for some time, though, as the prices for smartphones have fallen and their capabilities have grown during that period.

In fact, growth in worldwide mobile phone sales was lower than IDC had initially forecast, which was 13.3 for the quarter, and was also lower sequentially from 16.8 percent growth in the first quarter of 2011, the report said.

Meanwhile, sales of feature phones in the second quarter fell by four percent compared to sales in the same quarter last year, the first decline since the third quarter of 2009.

That doesn't bode well going forward for larger OEMs who make large numbers of feature phones, and that's particularly true for the largest of them all -- Finnish phone maker Nokia.

"Stalwarts such as Nokia are losing share in the feature phone category to low-cost suppliers such as Micromax, TCL-Alcatel, and Huawei," Kevin Restivo, senior research analyst with IDC's Worldwide Mobile Phone Tracker, said in the report.

In the second quarter, Nokia shipped 88.5 million phones -- both feature phones and smartphones combined -- for an overall global market share of 24.2 percent.

During the same quarter in 2010, however, Nokia shipped 111.1 million phones and held a share of 33.8 percent. Certainly some of that 20.3 percent decline was due to uncertainty surrounding Nokia's deal with Microsoft announced in February.

Under the agreement, Nokia's smartphones will exclusively run Microsoft's Windows Phone. Since the first fruits of that deal are not expected until late this year, though, many customers have held off buying Nokia devices or shifted to other vendors.

One of the biggest beneficiaries of the market uncertainty and the burgeoning transition to smartphones over feature phones has been Apple (NASDAQ: AAPL). In the second quarter, Apple shipped 20.3 million mobile phones -- up from 8.4 million units in the same period in 2010, a shift of 141.8 percent year-over-year.

With Nokia still in first place, albeit slipping, and Apple in fourth, that leaves Samsung with second place for the quarter with 70.2 million phones shipped, and LG Electronics in third, with shipments of 24.8 million. In fifth place, ZTE sold 16.6 million phones.

Stuart J. Johnston is a contributing editor at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.

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